Advancing Analytics: The Path Forward for Finance Leaders, Part One

Analytics Finance- Today’s CFOs have an eye on more than just the bottom line. They are watching the horizon, predicting what’s coming, and charting the course ahead.

As your organization’s finance leader, the opportunity to better understand the landscape and your business has never been greater. Advances in analytics—powered by digital technologies such as automation and machine learning—give finance teams deeper business insights, and the ability to identify performance issues, predict scenarios, and change outcomes.

It also means finance teams no longer have to look back in time for answers. Advanced analytics can help them look forward and better forecast the future with predictions such as what products and customers are most profitable, or which customers are more likely to pay their invoices on time.

At the same time, technology enables the automation of more financial processes, from accounting to auditing, freeing up finance teams to focus more on analysis and partnering with the business.

Most CFOs recognize the critical need for greater analytics. According to IBM’s “Elevate Your Enterprise, Chief Financial Officer” study, CFOs cite analytics as a key source for the discovery of new growth opportunities, supported by the integration of enterprise data with external market and competitor data.

But despite the value, finance teams remain challenged with putting data and analytics into use. In Workday’s “Finance Redefined: Workday Global Finance Leader Survey,” results showed that only 35 percent of respondents are making extensive use of advanced analytics in key areas such as planning, budgeting, and forecasting.

What are the difficulties? The reasons cited by finance leaders are often the same—disconnected systems and data, too much time spent on transactional work, issues with business partnerships, and a lack of talent. At a recent industry event, Matt Schwenderman, principal at Deloitte Consulting LLP, highlighted two key issues finance faces when it comes analytics: technology and talent. “Analytics is a key way that finance supports a more digital operating model, but we don’t necessarily have the technologies and the talent aligned with that,” he says.

CFOs realize they must begin addressing these challenges now. Without the use of analytics, companies run the risk of making the wrong decisions, ultimately stalling growth and impacting performance.

In this two-part blog series, we will look at three key areas (based on various research studies and interviews with finance leaders) that are critical for advancing analytics in the finance function: a core technology foundation, strategic business partnerships, and leadership.

A Core Technology Foundation

While many finance organizations aspire to advance their analytics, most are still focused on getting the technology foundation right. According to Schwenderman, some are having more success than others. “We have some organizations that are doing incredibly creative and avant garde things with data and insight-driven decisions,” he says. “Others are still relying on what I refer to as human middleware—moving spreadsheet-driven information throughout the organization and walking into very important meetings with varying sets of the same results, arguing about what’s the right number.”

Finance teams often work with data that is spread across disparate systems, with different data definitions. There is no sole source of financial truth to work from, making it difficult to trust the accuracy of data and analyze it for insights. In fact, system inefficiency was cited by finance leaders as the second-highest barrier standing in the way of developing data-driven business insights in Workday’s “Finance Redefined” study.

Jim Kendall, vice president of finance solutions at Aon, one of the world’s leading professional services firms, describes how managing disparate finance systems in locations across the globe impacted Aon’s ability to analyze the business. They faced the same challenges with HR systems as well. “As we’ve grown through acquisitions, the diversity of our systems and processes became a real issue for us,” he says. “It was difficult for leadership to have a global view of our people and financial results—we didn’t have a single source of analytics across finance and HR.”

How can system inefficiency impact performance? Consider global companies that sell the same products and services in multiple countries. They are using different financial systems and applying different data definitions to activities in each region. As a result, each location may be interpreting and reporting on the performance of the same product and service lines differently than required by the corporate office. This can lead to faulty analysis and impact decisions, such as parts of a business appearing more profitable than they actually are.

Read More Here

Article Credit: Forbes

The post Advancing Analytics: The Path Forward for Finance Leaders, Part One appeared first on erpinnews.